The US Government has updated its strategy for prosecuting white-collar crime. It is now placing a greater emphasis on encouraging financial firms to 'self-disclose' when they uncover fraud, market manipulation and corruption.

Deputy Assistant Attorney General Matthew Miner of the US Justice Department’s Criminal Division has told financial firms and other corporations that if they are to make swift voluntary disclosures and co-operate in other ways, his people will probably not prosecute them.

Miner oversees the division's fraud section, which houses the Foreign Corrupt Practices Act unit and the securities and financial fraud unit.

He acknowledged the painful decisions that managers had to make about whether or not to tell the authorities about misconduct that they had uncovered at their firmogs.

The goal of the prosecutors' Foreign Corrupt Practices Act Corporate Enforcement Policy (which is a year old) is to encourage voluntary disclosures by making it clear to companies that they will benefit from making them. Miner thought that the best way of encouraging "voluntary self-disclosures," as he called them, was for the prosecutors to start off on the assumption that they were not going to prosecute any company that made such disclosures, as long as the company also 'remediated' (made restitution to victims) and co-operated fully with the DoJ.

This policy has already led to three 'declinations' - another piece of prosecutorial jargon that refers to decisions not to prosecute. These involved Dun & Bradstreet, the Insurance Corporation of Barbados or ICBL, and Guralp Systems. In each case, the DoJ published a 'declination letter.' In the latter two cases, senior managers - a tempting target for the department - were involved in improper conduct yet the prosecutors nevertheless decided not to prosecute the firms.

Since March, according to Miner, the Criminal Division has considered the FCPA Corporate Enforcement Policy as “non-binding guidance” in all its corporate criminal cases, not just those involving foreign corrupt practices. He also said that he was going to "seek to apply the FCPA Corporate Enforcement Policy principles to mergers and acquisitions that uncover potential FCPA violations."

Compliance departments are often under-resourced, so Miner took a swipe at financial firms that failed to support the right level of staff and pay attention to its warnings at the highest level. He said that there was a "need for effective compliance and ethics programmes – programmes that foster a culture of compliance; that dedicate sufficient resources to compliance activities; and that ensure that experienced compliance personnel have appropriate access to management and to the board."

As an example of the FCPA's new (although steel-tipped) leniency, Miner mentioned the investigation of Barclays in connection with the front-running of FX transactions connected to its client, Hewlett Packard. In that case, Barclays FX traders allegedly misappropriated confidential information that Hewlett Packard gave to Barclays in connection with FX options and spot transactions and deceived Hewlett Packard about the nature of its trading.

This was serious misconduct that led to charges against various people, but not against the company. Barclays made a voluntary disclosure about its misconduct, conducted a thorough and comprehensive internal investigation and co-operated fully in the criminal investigation, providing all known relevant facts about the people involved. Barclays also took steps to improve its compliance programme in order to reduce the prospect of future fraud and market manipulation. It agreed to pay full restitution to Hewlett Packard and disgorged all its ill-gotten gains. Miner observed, none too gramatically: "I think it is safe to say that our approach toward Barclays may have been different if the bank had not voluntarily self-disclosed, fully co-operated and remediated."

Miner added that "although aggravating circumstances can overcome the presumption for a declination, such circumstances by no means preclude a declination."

The DoJ has just resolved an FCPA case with Petrobras, the Brazilian state-owned and state-controlled energy company, in which the company agreed to pay a combined penal total of $853.2 million in connection with its part in facilitating payments to politicians and political parties in Brazil, with the DoJ and Brazilian authorities investigating in tandem.

Meanwhile, Société Générale, based in Paris, and its wholly owned subsidiary, SGA Société Générale Acceptance NV, agreed in April to pay a combined total penalty of more than US$860 million (€755 million) to resolve charges with criminal authorities in the United States and France, including $585 million (€513⅔ million) relating to a multi-year scheme to pay bribes to officials in Libya and $275 million (€241½ million) for violations arising from its manipulation of the London InterBank Offered Rate (Libor), one of the world’s leading benchmark interest rates.